Premium-supported Medicare proposal spawns many questions, no solid answers

Medicare currently makes payments based on specific services, but policy discussion is swirling about changing the program to a premium support system that operates on capitation payments, or payments per person. The Kaiser Family Foundation (KFF) offered some answers to common questions that are now swirling after Rep. Paul Ryan (R-Wis) released a Republican health reform proposal that includes partially privatizing Medicare (see Ryan proposes ‘A Better Way’ to repeal Obamacare, Health Reform WK-EDGE, June 29, 2016). The KFF warned that out-of-pocket costs for beneficiaries could either rise or fall under the proposed plan, depending on various factors.

How would it work?

The new system would involve a federal payment made for each beneficiary toward a health plan purchase, either a private plan (like under Medicare Advantage), or traditional Medicare. Beneficiaries would be able to choose their plans. The KFF emphasized that that various premium support proposals provided over the last few years have key differences in how policies would work, including benefit specificity, health insurer rules, and payment setting.

The price tag

A premium payment system’s particular design will determine the amount of premiums and out-of-pocket payments. Premiums for covered services would vary by geography and plan. The Congressional Budget Office (CBO) found that total cost to beneficiaries would decrease if the federal payments were tied to the average plan bid but would increase if tied to the second lowest plan bid. A general decrease, however, does not mean that every beneficiary’s payments will go down. Most beneficiaries who remain in traditional Medicare would pay more.

One of the primary aims of such a system is to reduce federal spending. If plan competition increases and results in decreased premiums, and beneficiaries are incentivized to choose the most cost-effective health plan, long-term federal spending on the program could decrease. Like beneficiary costs, federal government costs depend on plan structure.

Effects on beneficiaries and providers

The preservation of particular benefits is currently unknown, as some proposals differ. Currently, Medicare Advantage plans must offer at least the amount of benefits a beneficiary would receive under traditional Medicare, but premium support proposals have not clearly established this requirement. Some proposals offer subsidies for low-income beneficiaries, but these may be insufficient to allow such individuals to select the plan they want. They may also need to switch plans frequently to avoid premium hikes. KFF believes that a premium support plan may erode traditional Medicare enrollment so much that providers may have fewer incentives to enroll in accountable care organizations and other payment reform efforts, and subsidized providers like teaching hospitals may not receive the financial support to which they are accustomed.

Senate sends sweeping opioid bill to president’s desk

Five days after the House of Representatives passed the conference report to the Comprehensive Addiction and Recovery Act (CARA) (S. 524) by an overwhelming majority of 407 to 5, the Senate followed suit, approving the conference report 92 to 2 and sending the legislative package to the President’s desk. The bill, the most sweeping drug legislation in years, aims to fight the nation’s growing opioid crisis. Concurrently, 46 members of the National Governors Association (NGA) signed a compact agreeing the boost efforts to fight the opioid epidemic.

In the U.S., approximately 4.5 million people were non-medical prescription pain reliever users in 2013, and an estimated 289,000 were current heroin users, according to HHS. The number of unintentional overdose deaths from prescription pain medications has nearly quadrupled from 1999 to 2013, and deaths related to heroin increased 39 percent between 2012 and 2013.

Comprehensive Addiction and Recovery Act

S. 524 authorizes the Attorney General and the HHS Secretary to award grants to address the national epidemics of heroin and prescription opioid addiction and makes other changes to federal law to combat opioid addiction and abuse. These changes would give medical professional and law enforcement more tools to help drug addicts and give emergency medical workers expanded access to a drug that can help reverse overdoses and improve treatment for incarcerated individuals.

Among other efforts, CARA will create a task force on pain management to review best practices for chronic and acute pain management and prescribing pain medication. It also creates awareness campaigns and supports community-based coalitions to address the local drug crisis. Other efforts improve access to overdose treatment, expand the reach of National Institutes of Health opioid research, and authorizes grants for residential treatment for pregnant and postpartum women with opioid use disorders.

Governors sign compact

Forty-six governors signed the NGA Compact to Fight Opioid Addiction, agreeing to redouble their efforts to fight the opioid epidemic with new steps to reduce inappropriate prescribing, change the nation’s understanding of opioids and addiction, and ensure a pathway to recovery for individuals suffering from addiction. Actions to be undertaken as a result of the compact include partnering the health care providers to develop or update evidence-based opioid prescribing guidelines and consider prescription limits with exceptions for certain patients and circumstances. The governors will also seek to reduce payment and administrative barriers in Medicaid and other health plans to promote access to a range of addiction treatment options, including well-supervised, medication-assisted treatment and comprehensive recovery services.

Largest mass shooting in U.S. history renews calls for changes to federal health policy

At 2:00 a.m. on Sunday, June 12, 2016, a man with an AR-15 assault rifle, a handgun, and another “device” walked into Pulse, a gay nightclub in Orlando, and carried out the deadliest mass shooting in American history. He killed 49 individuals, and wounded 53 others, before he was shot and killed by police.

According to Orange County Government Director of Health and Public Safety Dr. George Ralls, the nightclub’s location, approximately two blocks from Level 1 trauma center Orlando Regional Medical Center, where surgeons performed more than 30 surgeries on victims of the shooting, saved lives. Having a trauma center equipped to deal with the severe injuries inflicted, as well as resulting infections and other complications, is a “saving grace” for the tragedy, said Ralls.

Much of the public outcry following the attack is focused on whether the shooter was part of a terrorist organization or how the shooter was able to obtain the weapons. For public health advocacy groups, however, this tragedy is a reminder of federal laws and regulations which, they say, hinder their abilities to prevent similar massacres and properly treat patients in their aftermath.

Gun control research funding ban

In 1996, Rep. John Dickey (R-Ark) proposed an amendment to the omnibus consolidated appropriations act for fiscal year 1997 (P.L. 104-208) reading, “That none of the funds made available for injury prevention and control at the Centers for Disease Control and Prevention [CDC] may be used to advocate or promote gun control.” That same language has been included in each successful appropriations act passed since then; in 2011, the appropriations act for fiscal year 2012 expanded the funding ban to the National Institutes of Health (NIH) (P.L. 112-74). The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) includes an additional provision prohibiting HHS, health plans, and other databases from collecting information about firearm possession, use, or storage.

In a January 16, 2013, memorandum, President Barack Obama directed the HHS Secretary, through the Director of the CDC and other HHS scientific agencies to “conduct or sponsor research into the causes of gun violence and the ways to prevent it.” However, no funding has been appropriated to the research, and the CDC has not taken any action.

There have been multiple calls to end the research ban. In April 2016, a letter to the leaders of the Senate and House appropriations committees from 141 health care, public health, and scientific organizations asked Congress to provide the CDC with funding for research into the causes and prevention of gun violence. At the end of May 2016, Democrat members of the House of Representatives signed a letter asking House leadership to remove amendments freezing gun violence research from future appropriations bills.

Two days after the Pulse shooting, the American Medical Association (AMA) announced that the organization, the largest association of physicians and medical students in the United States and one of the signatories of the April 2016 letter, will actively lobby Congress to overturn the research ban. Calling gun violence a public health crisis, AMA President Steven J. Stack, M.D. said, “Even as America faces a crisis unrivaled in any other developed country, the Congress prohibits the CDC from conducting the very research that would help us understand the problems associated with gun violence and determine how to reduce the high rate of firearm-related deaths and injuries. An epidemiological analysis of gun violence is vital so physicians and other health providers, law enforcement, and society at large may be able to prevent injury, death and other harms to society resulting from firearms.”

FDA blood donor policy

When the HIV/AIDS epidemic began over 30 years ago, the FDA implemented a lifetime ban on blood donations from men who have sex with men (MSM), regardless of risk factors. Since at least 1997, the American Association of Blood Banks, the Red Cross, and America’s Blood Centers have advocated revising the policy and removing the lifetime ban because advances in blood screening technology and the scientific community’s increasing understanding of the HIV/AIDS virus rendered the ban medically and scientifically unwarranted. HHS convened a non-partisan group of scientific experts in 2010 for the Advisory Committee on Blood Safety and Availability. The Committee concluded that the lifetime ban should be changed because it prohibits low-risk donors from giving blood, but allows donations from high-risk individuals.

The FDA updated its policy in a December 23, 2014, announcement from then-Commissioner Margaret Hamburg, M.D. The change lifted the lifetime ban on blood donations from MSM, permitting donations if at least one year has elapsed since the donor’s last sexual contact with another man. The FDA noted  that the new policy, which went into effect in December 2015, would align blood centers’ treatment of MSM more closely to the treatment of other individuals who have engaged in behaviors that increase their risk of AIDS.

This change was met with mixed reactions. Responses to ending the lifetime ban have generally been positive, however, the 12-month deferral excludes many men who are in monogamous relationships and present no risk of HIV transmission while not deferring donations from women who have had many sexual partners, unless they are prostitutes.

In the wake of the Pulse shooting, people all over Florida, including many members of the LGBTQ community, rushed to donate blood to meet the needs of the injured victims. Due to the FDA policy, many would-be donors were turned away. Over 100 bipartisan members of the House and 24 bipartisan members of the Senate sent letters to FDA Commissioner Robert A. Califf, M.D., asking for an update on implementation of the 12-month deferral policy, and expressing their hopes that the agency will continue moving toward a less discriminatory and more science-based policy.

House passes bill to raise some off-campus hospital outpatient department rates

Some off-campus hospital outpatient departments (HOPDs) could be grandfathered into receiving outpatient payment rates under a piece of legislation passed by the House. The legislation—known as “The Helping Hospitals Improve Patient Care Act” (HHIPCA) (H.R. 5273)—would provide an exception to new off-campus HOPD payment rules for off-campus facilities that were “mid-build” when the Bipartisan Budget Act of 2015 (BBA) (P.L.114-74) was enacted. According to the Congressional Budget Office (CBO), the legislation, which also seeks to modify other Medicare payment rules, would increase direct spending by $50 million over the 2017 to 2021 period and decrease direct spending by $14 million over the 2017 to 2026 period.


The BBA’s HOPD payment rules require that Medicare pay for services furnished in new off-campus facilities as though those they were performed in an office or ambulatory surgical center. The new legislation would exempt mid-build HOPDs—facilities that were under construction on November 2, 2015—from the BBA rule and allow them to continue to receive outpatient rates at those facilities (see Lawmakers lend hospitals helping hand to improve patient care, Health Law Daily, May 19, 2016). The CBO estimates that the payment exception for mid-build HOPDs would be the most costly part of the legislation, increasing net Medicare spending by $750 million over the 2017-2026 period. The bill would also cut direct spending by $750 million over that same period by reducing the inpatient prospective payment system (IPPS) payment rate by 0.04 percent in fiscal year (FY) 2018.

Cancer hospitals

The legislation would also provide an exemption to the HOPD payment rules for cancer hospitals. Under the proposed law, cancer hospitals at new off-campus locations would continue to be paid at cancer hospital rates. The law would implement an attestation requirement for cancer hospitals seeking the higher payment rates and give HHS $2 million to audit those attestations. Overall, the CBO estimates, the cancer hospital provisions of the HHIPCA would increase direct spending by $20 million over the 2017 to 2021 period but have no net budgetary effect over the 2017 to 2026.


The law would also exempt eligible professionals based in ambulatory surgical centers (ASCs) from punishment under the electronic health record (EHR) meaningful use program. The exemption from compliance with EHR standards would apply to payments made in calendar years 2017 and 2018 and continue with the Merit-Based Incentive Payment System (MIPS) beginning in 2019. The CBO estimates that the exemption would exempt approximately 2000 ASC-based professionals from penalties related to EHR use—penalties that the CBO expects to average about $3000 per professional. The CBO estimates that the EHR provision would increase direct spending by $17 million over the 2017 to 2026 period.