AMA warns of drastically reduced competition if mergers allowed

More competition is needed in the health insurance markets, a premise supporting the efforts to block the merger of four of the nation’s biggest health insurance companies, according to an analysis by the American Medical Association (AMA). Anthem’s acquisition of Cigna and the merger of Aetna and Humana would essentially eliminate competition in 24 states. The Department of Justice filed suit in July to challenge the two mergers (see DOJ lawsuit steps in between Aetna-Humana and Anthem-Cigna mergers, Health Law Daily, July 21, 2016).

Competition in health insurance markets

The AMA assessed the anticompetitive impact of the potential mergers in “Competition in Health Insurance: A Comprehensive Study of U.S. Markets,” which is based on 2014 data captured from commercial enrollment in fully and self-insured health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-services (POS) plans. The analysis found a significant absence of health insurer competition in 71 percent of the metropolitan areas studied. In 40 percent of the metropolitan areas studied, a single health insurer had at least a 50 percent share of the commercial health insurance market. In 14 states, a single insurer had at least a 50 percent share of the commercial health insurance market.

Specifically, the Anthem-Cigna merger stands to quash competition in 121 metropolitan areas throughout 14 states. Nine of the states are attempting to block the merger, but Indiana, Kentucky, Nevada, Ohio, and Wisconsin have not yet taken a position. The Aetna-Humana merger would shut down competition in 57 metropolitan areas in 15 states. Only four states have acted to block the merger, but Arizona, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Tennessee, Texas, Utah, West Virginia, and Wisconsin have not yet taken a position.

“The AMA analyses show that Anthem-Cigna and Aetna-Humana mergers would significantly compromise market competition in the health insurance industry and threaten health care access, quality and affordability,” said Andrew W. Gurman, M.D., president of the AMA. “With existing competition in health insurance markets already at alarmingly low levels, federal and state antitrust officials have powerful reasons to block harmful mergers and foster a more competitive marketplace that will operate in patients’ best interests.”

HHS uses CIAs to teach fraudulent providers a lesson

The United States reached a $28.5 million settlement with a private for-profit corporation that operates 35 skilled nursing facilities (SNF), most located in California following allegations that the corporation engaged in a scheme to submit false claims to Medicare and TRICARE for medically unnecessary rehabilitation therapy services. Under the settlement, the corporation entered into a corporate integrity agreement (CIA) with the HHS Office of Inspector General (OIG). In an unrelated case, the OIG imposed a $3 million penalty—the largest penalty for CIA violations to date—on another provider that failed to correct improper billing practices during the term of its CIA.

Settlement and CIA for false claims scheme

North American Health Care Inc. (NAHC), its chairman of the board, and its senior vice president of reimbursement analysis will pay $30 million to resolve allegations that they violated the False Claims Act (31 U.S.C. §§3729–3733) by causing the submission of false claims to Medicare and TRICARE for medically unnecessary rehabilitation therapy services provided to skilled nursing facility (SNF) residents. The government alleges that the senior vice president of reimbursement analysis contributed to the conduct by creating the improper billing scheme and that the chairman reinforced the scheme at NAHC facilities. As part of the settlement, NAHC entered into a five-year CIA with the OIG requiring an independent review organization to annually review therapy services billed to Medicare.

Violation of CIA

Kindred Health Care, Inc., paid a penalty of more than $3 million to the federal government for failing to comply with a CIA, marking the largest penalty for CIA violations to date. Kindred entered into a CIA with the OIG after it was discovered that Kindred billed Medicare for hospice care provided to patients who were not eligible for the services. In audits mandated by the CIA, internal auditors found that Kindred failed to correct improper billing practices in the fourth year of its five-year agreement. The OIG caught wind of the noncompliance during several unannounced visits.

“This penalty should send a signal to providers that failure to implement these requirements will have serious consequences,” said Inspector General Daniel R. Levinson. “We will continue to closely monitor Kindred’s compliance with the CIA.”

$87M in IT enhancements to ‘unlock’ data, improve health center quality

HHS will provide $87 million in funding to support information technology (IT) enhancements in 1,310 health centers throughout the United States and its territories. The funding is intended to support the health centers’ transition to value-based models of care, promote information-sharing to improve quality of care, allow the centers to use information to support better decisions, and increase their engagement in transforming delivery systems. HHS Secretary Sylvia Burwell stated that the funding “will help unlock health care data and put it to work.”

Health Resources and Services Administration (HRSA) health centers provide comprehensive preventive and primary health care to patients regardless of their ability to pay, adjusting fees based on that ability. Section 10503 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established an $11 billion, five-year Community Health Center (CHC) Fund to strengthen the centers, which was extended by the Medicare Access and CHIP Reauthorization Act (MACRA) (P.L. 114-10) of 2015. Funding for the IT enhancements comes from the CHC Fund.

Health centers that use the funding to purchase or upgrade electronic health record (EHR) systems must ensure that the technology is certified by the Office of the National Coordinator for Health Information Technology (ONC).

FDA adds voice to EpiPen saga

Recent news about the price spike of EpiPen, manufactured by Mylan NL, has caused heightened concern among lawmakers and the general public. In a letter to Mylan in late August 2016, Sen. Chuck Grassley (R-Iowa) asked a series of questions about the pricing, including what analyses were conducted in determining the price, Mylan’s advertising budget for EpiPen in the first half of 2016 as well as 2015, an explanation of the features the company said have improved the product and its value, whether the company offers patient assistance programs, and whether the company has school assistance programs for providing the drug and if so, how many schools have used the programs. In addition, on September 21, 2016, the House Committee on Oversight and Government Reform will hold a bipartisan hearing with officials from Mylan to ask CEO Heather Bresch about the price spikes.

Mylan, which acquired the product in 2007, recently raised the list price for a pair of EpiPen auto-injectors to $600. The price has been rising from a cost of about $100 in 2008. In addition, the EpiPen product has patents listed through 2025 that could delay generic competition.

In the FDA Voice, the agency’s official blog, Janet Woodcock, Director of the FDA’s Center for Drug Evaluation and Research, noted that the EpiPen product has patents listed through 2025 that could delay generic competition. As a result, questions are raised as to what role the FDA can take in the EpiPen saga. Woodcock went on to stress that while the FDA does not regulate drug prices – it can ensure that safe and effective generic versions of a drug can be approved for the market. The FDA has already approved four epinephrine auto-injectors to treat anaphylaxis in an emergency, with two currently marketed. The EpiPen notoriety is because it does not have any FDA-rated therapeutic equivalents at the time.

The FDA does not regulate drug prices – prices are set by the drug makers or distributors. It’s our job to ensure medications, including emergency medications, are safe and effective. We also recognize when we approve new drugs, including generic versions of a drug, it may improve competition in the marketplace. The good news is that the FDA has already approved four epinephrine auto-injectors to treat anaphylaxis in an emergency, and two are currently marketed. The EpiPen does not have any FDA-rated therapeutic equivalents. But like EpiPen, these alternative products are approved by the FDA as safe and effective for treating anaphylaxis. As always, patients should check with their doctor on whether a particular treatment is appropriate and available.

According to Woodcock, the FDA is doing all it can to encourage manufacturers to develop new auto-injectors for epinephrine that can be administered easily and safely by anyone. She highlighted the “roadmap” issued by the FDA via a draft guidance in June 2013 to help manufacturers get the auto-injectors to market faster. Earlier this year, the FDA provided industry with a draft guidance on how to determine if patients can effectively use the new devices.

Not only did the FDA take actions to encourage auto-injector development, the agency touted that it speeds along the process by prioritizing and expediting reviews of applications for first generics.